Vietnam's Loship strives to be listed on the NYSE in 2024
(ASEAN Startups) Vietnam-based delivery startup Loship , which aims to list on New York Stock Exchange (NYSE) by 2024, is eyeing opportunities in quick commerce as the firm expands into tier-3 and tier 4 cities of its home country.
“We’re accelerating our expansion in new markets, especially the Tier-III and IV cities, after marking our presence in the metropolitans and Tier-II cities,” its Co-Founder and Chief Executive Officer Trung Hoang Nguyen said. “Loship aims to be present in at least 10 cities of Vietnam by the end of 2021 and within the next 2 years, 10 percent of the Vietnamese population will use our services.”
The firm, which raised $12 million in pre-Series C funding in August, also see exponential growth as the COVID-19 pandemic boosted demand for online grocery, food delivery, and courier services.
“We have recorded an exponential increase in order volumes compared to pre-Covid levels. In particular, online grocery orders on Loship increased sevenfold, whereas courier services and over-the-counter pharmacy orders also skyrocketed,” he said in an interview.
Nearly two-thirds of Vietnamese households have increased their frequency of delivery service used. Transaction value per order was also shot up as customers tended to buy more food and essentials to stockpile, he said.
Post-pandemic, Nguyen said the prospects will not become any less prominent.
“We may experience a dip in order volumes, but the customer habits have become so firmly ingrained that they will not be easily undone anytime soon,” he added. “Online food delivery services are on the rise and show no signs of slowing down amid lifting pandemic-era restrictions. Customers still prefer to get things delivered at home. Even when normalcy returns, we don’t expect customers to shift completely back to in-house dining.”
Nguyen sees significant opportunities in quick commerce.
“Customers nowadays don’t just want many things, they want them delivered instantly without any hassle. Loship is the pioneer to initiate the idea of quick commerce in Vietnam, with the aim to deliver not just food, grocery but many other things to customers with ease, in a matter of minutes. We strongly believe in the huge market potential of quick commerce and will continue to expand to new verticals to better match our customers’ growing expectations,” he added.
On its regional expansion plan, Nguyen said Loship is not in a rush as its focus market is still Vietnam. Loship will strive to enhance its technology and human capabilities before expanding to other countries, he said. “The current macro environment isn’t favorable for regional expansion, especially amid the uncertainty and economic turmoil caused by the pandemic. Still, regional expansion is part of our strategic plan in the long run, with Laos and Cambodia as must-win markets.”
Loship is also looking to add buy-now-pay-later (BNPL) options on its platform as it expands its product offerings.
“We are in discussions with some BNPL providers to offer BNPL options to our merchants and customers. Vietnam traditionally had low financial inclusion levels; the majority of the population is still underbanked. Many consumers often don’t have access to lending services or installment payment plans. So, we believe BNPL will become a gateway to get credit to people who were previously difficult to reach,” he said.
Founded in 2017, Loship is a one-hour delivery e-commerce platform in Vietnam, delivering goods – from food, groceries, courier, to pharmaceuticals, home necessities, raw materials, etc. Its business model is similar to some global players such as US-based DoorDash, Turkey-based Getir, or China’s Meituan Dianping.
Loship competes with rivals including Indonesia-based Gojek , Singapore-headquartered Grab and Temasek-backed AhaMove , among others, in Vietnam which has a population of more than 98 million.
Series C to conclude by year-end/early 2022
Loship, which is in the midst of raising a Series C funding round, expects to close the funding round by year-end or early next year.
“We are in advanced talks with a diverse group of potential investors from Thailand, Singapore, mainland China, Europe, etc., who have shown keen interest in the Vietnam story and Loship’s growth momentum. We are also happy to have numerous discussions with Vietnamese investors, showing the Vietnamese investors’ growing attention to local startups,” Trung said.
Last month, DealStreetAsia reported that Loship is in “early talks” with Japan’s Daiwa Securities Group and other investors to close a $50 million Series C round but Trung declined to comment on the news.
Loship announced in August a $12 million pre-Series C funding round co-led by Ant Group -backed venture capital firm BAce Capital and the direct investment unit of Sun Hung Kai & Co Ltd (SHK & Co), an alternative investment company listed in Hong Kong.
On its US listing plan, Trung said merging with a special purpose acquisition company (SPAC) seems a more realistic option for the firm.
“This will help us to go to the US capital market faster and more smoothly. From now till 2024, there will be a lot of things we want to observe to make a final decision. We will consider all options and definitely follow the one that maximizes the benefits for Loship,” he explained.
In the interview, Nguyen also shared his views on competition, Loship’s competitive advantages, the firm’s planned profitability timeline, and the latest progress of its listing plan.
Below is the edited excerpt:
Loship earlier said the new funding from pre-Series C will be used to expand into new cities and grow verticals like B2B deliveries for small food and beverage businesses and retail stores. Could you elaborate more on this?
We’re accelerating our expansion in new markets, especially the Tier-III and IV cities, after marking our presence in the metropolitans and Tier-II cities. Loship aims to be present in at least 10 cities of Vietnam by the end of 2021 and within the next two years, 10 percent of the Vietnamese population will use our Loship services.
In the third quarter of 2021, despite the strike of Covid-19 and nation-wide lockdown, we added four new cities to our operations map including Hai Phong, Quang Ninh, Binh Duong, and Khanh Hoa. By year-end, we plan to make inroads to five other cities across the country such as Lam Dong, Nghe An, Quang Nam, Thua Thien-Hue, Ba Ria-Vung Tau. More than 30 million or one in three Vietnamese now have access to our food delivery platform with this expansion.
Will Loship expand into other countries or will it just focus on Vietnam? And why?
At this stage, our main market is Vietnam. We strive to enhance our technology and human capabilities before expanding to other countries. In addition, the current macro environment isn’t favorable for regional expansion, especially amid the uncertainty and economic turmoil caused by the pandemic.
Still, regional expansion is part of our strategic plan in the long run, with Laos and Cambodia as must-win markets. We set our sights on conquering a total market of 400 million population, and once we have researched enough and have our resources in place, we’ll be ready to start operations there.
Loship is in the process of raising a Series C and it is expected to close by the end of this year and it is in advanced talks with investors. What’s the latest update?
We are in advanced talks with a diverse group of potential investors from Thailand, Singapore, mainland China, Europe, etc., who have shown keen interest in the Vietnam story and Loship’s growth momentum. Moreover, we are happy to have numerous discussions with Vietnamese investors, showing the Vietnamese investors’ growing attention to local startups. We are expected to close the round by the end of this year or early next year.
Where are the opportunities for Loship in the Vietnam market? How does Loship plan to tap into these opportunities?
Vietnam’s food delivery market size is estimated to grow at a compound annual growth rate (CAGR) of about 24 percent from 2021 to 2026. Revenue in Vietnam’s food delivery segment is expected to reach $377 million in 2021, according to Statista. However, compared to other Asian countries such as India or China, this market size of Vietnam is tiny. Vietnam is still in the nascent stage to adopt online-to-offline (O2O) services and the market has plenty of room for tremendous growth.
Second, only about 5 percent of the food delivery market has been tapped if we compare the value of food delivery with the value of the total foodservice market. The pace of urbanization in Vietnam is accelerating, and in the long run, smaller non-metro cities will soon get acquainted with food ordering. Our strategy is to expand operations across Vietnam, especially in lower-tier cities to take advantage of rapid urbanization and emerging customer trends.
Another significant opportunity is in quick commerce . Customers nowadays don’t just want many things, they want them delivered instantly without any hassle. Loship is the pioneer to initiate the idea of quick commerce in Vietnam, with the aim to deliver not just food, grocery but many other things to customers with ease, in a matter of minutes. We strongly believe in the huge market potential of quick commerce and will continue to expand to new verticals to better match our customers’ growing expectations.
How is the competition like? What is Loship’s competitive advantage?
The competition is fierce. Vietnam poses many favorable conditions for food delivery, including the vast market, substantial user base, high internet, and mobile penetration rates. As such, the market attracts many aggressive players to tap into, who have all the resources required to capture the majority of the market share. Barriers to market entry are not too large, leading to the fact that in the future, there will be more companies with greater potential to enter the market.
However, we don’t care much about the competition. Our sole focus is on customers – and customers are what keep us in the game.
What is Loship’s competitive advantage?
Loship is the only local startup in the scene. As the local, we understand our local customers on a deeper level compared to other regional counterparts. Like the locals, we represent every ethos of the Vietnamese and we have our winning playbook on where to win and where to lose. We are receiving a little more ‘local love’ as Vietnamese customers are now increasingly rooting for homegrown businesses.
Loship has the ability to quickly adapt to market changes or emerging customer trends. Similarly, we can quickly identify and react to problems. As a result, we are able to serve our customers more directly and with greater flexibility than our counterparts. Large businesses often have capital and scope of operation advantages, but they are often not as agile as smaller startups.
We outperform competitors in terms of merchant count, not limited to food but also other verticals like grocery, laundry, pet supplies, etc. There are currently more than 250,000 merchants on our platform and during the Covid-19 pandemic alone, we have digitized over 80,000 mom-and-pop shops and retail stores.
We have a business-to-business (B2B) business that sets us apart from the crowd. Our B2B platform allows the merchants to source ingredients and food packaging in the most cost-effective and fastest delivery. The business is thriving alongside our B2C segment. Just before the pandemic, more than 50,000 food and beverages (F&B) stores were using Loship’s B2B service, accounting for roughly one-fifth of the total F&B stores in the market.
As the number of covid-19 cases has begun to decline since early September, how will this have an impact on demand for Loship’s services? Has there been a change in consumers’ behavior on delivery services? What are the prospects for Loship post-Covid?
Vietnam saw its number of COVID-19 cases averaging to 3,000 cases a day last month – a fraction compared with the pandemic’s peak. Late pandemic life hasn’t quite returned to the status quo, but it feels much closer to normal than it did three months ago.
Online food delivery services are on the rise and show no signs of slowing down amid lifting pandemic-era restrictions. Customers still prefer to get things delivered at home. Even when normalcy returns, we don’t expect customers to shift completely back to in-house dining.
We have recorded an exponential increase in order volumes compared to pre-covid levels. In particular, online grocery orders on Loship increased sevenfold, whereas courier services and over-the-counter pharmacy orders also skyrocketed. Nearly two-thirds of Vietnamese households have increased their frequency of delivery service usage. Transaction value per order was also shot up as customers tended to buy more food and essentials to stockpile.
Post-pandemic, the prospects will not become any less prominent. We may experience a dip in order volumes, but the customer habits have become so firmly ingrained that they will not be easily undone anytime soon.
Any other products or services Loship plans to offer?
Food delivery is just part of our game. Our mission is to deliver everything customers need, from food, groceries, pet essentials, cosmetics, over-the-counter medications, and more. We’ll continuously add new services to our platform to make home delivery easier and more affordable for everyone. Cleaning services booking, ticket booking, massage, and nail services booking are some of the verticals we are looking at.
Second, we’ll partner with more payment gateway providers to give our users a variety of payment options and facilitate cashless payments. In the long term, we consider entering the FinTech market with our own e-wallet and point-of-sale (POS) system, enhancing and completing our ecosystem.
Third,
buy-now-pay-later (BNPL)
is also a pivotal part of our playbook. We are in discussions with some BNPL providers to offer BNPL options to our merchants and customers.
Vietnam has traditionally had low financial inclusion levels; the majority of the population is still underbanked. Many consumers often don’t have access to lending services or installment payment plans. So, we believe BNPL will become a gateway to getting credit to people who were previously difficult to reach, cementing our place in the consumer wallets.
On profitability, is there a timeline when will Loship break even? Could you share the company’s revenue/latest financials?
Making profits is important – to protect the value of investors who have put their trust in us. Still, break-even planning needs to be prudent and in line with the company’s overall growth goals.
Loship is currently profitable on Unit Economics. We are in no hurry to drive profits but will continue to invest in our existing capabilities, new markets, and businesses to enhance customer value and boost the ecosystem.
In the future, we expect to reach a break-even point with better investment optimization and operation fine-tuning. We are optimistic that the next 18 to 20 months will be a favorable time. We don’t just rely on food delivery but focus more on non-food and long-tail services that can bring in greater revenue than food delivery. The faster we can move in the B2B and long-tail segments like non-food, the more we can subsidize our B2C service. And the profitability will come from there.
Loship said in an interview in August that it hopes to debut on the NYSE by 2024, after reaching profitability in 18 to 24 months. How’s the progress so far? Is there any preference between traditional IPO and merging with SPAC?
IPO is one of the key milestones we want to achieve in the next three years. We hope to debut on the NYSE by 2024, after reaching profitability.
As an innovative company, we prefer traditional IPO: Direct listing. However, US investors typically don’t know much about Southeast Asian companies and it creates huge challenges for companies in Southeast Asia (including Vietnam) to attract capital from investors on the stock market.
Therefore, SPAC seems a more realistic option for us. This will help us to go to the US capital market faster and more smoothly. From now till 2024, there will be a lot of things we want to observe to make a final decision. We will consider all options and definitely follow the one that maximizes the benefits for Loship.
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